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Table Of Contents
Foreword
Chapter 1:
Introduction
Chapter 2:
Debt consolidation
Chapter 3:
Strategies Of Debt Consolidation
Chapter 4:
How To Be A Good Debt Manager
Chapter 5:
Factors To Be Considered In Debt Consolidation
Chapter 6:
Re-Financing to Consolidate Debt
Chapter 7:
Student Loan Consolidation
Chapter 8:
Ways To Save Money
Wrapping Up
More Ways To Boost Your Consolidation Skills
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Foreword
Falling into the trap of unmanageable debt is a very common
situation nowadays. It is a proven fact that more than 40% of
US
people spends more than what they earn and very obviously most of
them experience the difficulty of paying debt at the right time. Get all
the info you need here.
Debt Consolidation Strategies
How To Become Great At Managing Debt
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Chapter 1:
Introduction
Synopsis
Climbing out of the trap of debt could be a real complicated process
without using any proper procedure. Are you also one of them and
swimming in the financial hot water?
solution?
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Do you really know any
The Basics
Well debt consolidation plan is the real savior which can actually
bring you out of the situation. Debt consolidation helps you to pay
off/clear your multiple loans at a same time. It is done with an
objective of securing a fixed interest rate or lesser interest rate.
Now you might be eager to know the complete details about debt
consolidation. Well, here I am going to discuss the entire details
about it.
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Chapter 2:
Debt consolidation
Synopsis
Here I am going to tell you all about debt consolidation so that you
will get a clear idea about the entire process of debt consolidation.
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What Is Debt Consolidation
Generally, you can find there are two types of debts but each of them
has different sub types included. Loans are one. Loans are offered for
fixed amounts and are not reusable after paying it off. You can have
several types of loans and the following are the loan typesPersonal Loan- This type of loan is offered for a specific amount of
money. A personal loan is given for a declared and undeclared usage.
This type of loan is processed through a bank or other authentic
financial lending institute. Secured loans are given to anyone against
property or guarantor but unsecured loans are only provided to the
consumers with a high credit rating.
Mortgage Loan- It is a long term loan and mortgage loans are
specifically issued for purchasing personal or commercial property.
As a customer, here you might negotiate to lower the monthly
payment.
Educational Loan- This type of loan is particularly designed for
educational purpose only. Educational loans are issued for paying
educational bills, hostel fees, tuition fees and other living expenses for
college or university. This type of loan is paid after completing the
course successfully. In this type of loan you can ask for an additional
grace period.
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Now these are the typical traditional loans and the second type of
debt is revolving credit. It is really important to know what revolving
credit is. Unlike traditional loans, it allows you to borrow the same
amount of money again after paying the loan amount.
There are mainly two types of revolving credit you can find in the
market and they are Credit Card
 Line of Credit
Credit CardYes today we all use plastic money. I am sure that you are aware of
the fact that a credit card is called plastic money. Today a credit card
has become the most common form of personal debt. According to
the latest surveys, it is said that almost each American has more than
five credit cards on average.
Line of CreditGenerally, a line of credit is issued by banks and other financial
organizations. It provides a reusable source of funds and you can
withdraw it by check or cash.
So now you have probably have a good idea about different forms of
debts but we are not going to talk about debt but debt consolidation.
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Now the question might come up… why I told you so many things
about debt when the main topic is debt consolidation here.
Well, the reason is very simple; without knowing what debt is you
would not be able to understand what debt consolidation is.
Today everything seems alright in your financial world and you are
happy and completely free of worry but tomorrow could be the day
when you might have to face a very hectic situation. No one knows
about tomorrow.
There are many situations where people find themselves unable to
pay off the current debt obligation. Due to the recent financial crisis,
a lot of people have lost their job and for them, paying the debt is just
impossible. What if you are also one of them? Have you ever thought
about it?
The devaluation of many homes, properties, resulting in negative
equity, is one of the most crucial reasons why most people are still
unable to get rid of the burden of debt. Especially after the last
housing bubble burst, most of the US homes have lost 28% of their
value on an average.
One of the most practical ways to pay off the insurmountable debt is
nothing but debt consolidation.
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Usually there are two types of debt consolidation but it comes in one
of two forms- Home Equity Loan and Negotiated Debt Settlement
Home Equity LoanThis is one of the most effective debt consolidation solutions for
mortgage customers. This type of debt consolidation loan allows a
customer to refinance their mortgage. Here the customer can use the
equity amount that he built up as a loan guarantee. Here the
consumer can use the same amount to pay off the higher interest
loans and credit card loans.
With the help of this home equity loan, home owners just have to pay
one single payment per month which is definitely lesser than the total
combined monthly loan amount of all the outstanding loans.
Negotiated Debt SettlementThis is another type of debt consolidation loan. It includes the
involvement of a third party service which is specialized in debt
consolidation.
It is very obvious that you want to know about the exact services you
will get. Usually the third party will contact each of the creditors
personally on behalf of you. Here the third party service will negotiate
an amount and you have to pay that amount every month. The
advantage of going for this sort of settlement is that the negotiated
amount will be always lesser than actual loan amount.
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All you have to do is pay the money to the third party and they will
make the payment to each of the creditors.
Just like any other financial planning, debt consolidation also
requires some smart strategies to follow. The more effective your debt
consolidation strategy is, the more easily you will be able to get rid of
the debt. Now it is really important to follow some effective strategies
and here I am going to discuss some highly effective debt
consolidation strategies with you.
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Chapter 3:
Strategies Of Debt Consolidation
Synopsis
If you are just like many other people and find yourself trapped into
the debt crisis, then you are at the ideal place. All is not lost! Rather
there are different ways in which you can turn the situation around.
My main purpose is to give you some insight into the crucial things
that you should do and the options that you have.
There are number of strategies to tackle the situation very easily and
here I am going to describe the strategies that you need to follow.
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Strategies
Make a BudgetMaking a proper budget is the most important thing that you should
do. Do you know what the purpose of making budget is? A budget will
help you to track the incoming and outgoing money.
A well developed budget always helps people to make a plan so that
they can live below their means instead of living beyond it. Yes, it
helps to change the entire mindset about money so that people can
save more money and the more money you will save the sooner you
will be able to pay off the debt completely.
Budget making is the most important debt consolidation strategy that
you can implement.
Sell some assets in order to pay your debtsI am sure that you know about E Bay. Do you know how much money
E Bay makes each year? Billions! If you have excess amount of assets
then you could easily sell some of them to get those debts under
control.
Pay more on debts on a monthly basisIf you pay more than the minimum amount then you will be able to
get rid of all the debts sooner and easily.
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Try to do the same thing with all of your debts that you can afford. It
would be better if you do this than with a loan with the higher interest
rate.
Restructure your mortgage paymentIf you want to reduce the mortgage loan payment amount in a
significant way then you should implement a bi-weekly mortgage
system. It will help you to reduce the rate of interest significantly.
It will surely help you to pay off the loan amount completely.
RefinancingIf you have your own house and want to obtain a lower interest rate
then a refinance could be the best option.
But if you are unable to get a lower interest rate for your mortgage
loan or there will be a penalty then you can go for equity loan or line
of credit.
A loan secured by other personal propertyIf you have any expensive car or boat then you can easily get a loan
against that and you can use the same loan amount to pay off other
debts.
An unsecured loan-
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Unsecured loans are the only option if you do not have any other loan
options.
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Chapter 4:
How To Be A Good Debt Manager
Synopsis
There’s nothing more we want than to be able to efficiently manage
our cash. After all, the cash that we wish to manage is cash that's
frequently, hard earned. This is where a budget comes in. A budget
executed the right way, ought to help you see where your cash is
going, get more utility out of every dollar, and help you save some
extra for future use.
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How To
The 1st smart secret to a budget is to set a goal. What do you wish
to accomplish? Do you want to correctly appropriate your revenue
into bill payments? Do you wish to put an amount aside for a huge
purchase or a large investment? By having a goal, you'll be able to
shape your budget to best serve your interests.
Secondly, you'd want to take note of where your cash commonly
goes. This includes bills, major but regular purchases (like market
costs, healthcare costs, and the like), and daily miscellaneous
purchases.
Only when you list where you know your cash commonly goes will
you be able to distinguish which expenses you may do without.
Once you’ve identified these regular expenditures, take into
consideration what you may cut down on.
How much do you spend on your every day caffeine fix in the
morning? How much do you spend on paper deliveries to your
front door? The paltry $2 or $5 of these little purchases
cumulatively translates to more than $3600 a year!
Rather than buying your expensive latte or reading the paper in
print, put aside the amount you'd commonly pay for these little
routine purchases in a little container. You'll be surprised at how
much you’re saving out of your old budget.
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Being indebted is a vicious cycle on its own. You’re talking about
continuous payments, let alone large interest rates. The best way
to deal with this is to pay the lower limit on all of your debts in
order to avoid paying extraneous late fees.
Whatever money excesses you may have, you may opt to add on to
the payments you make in your greatest debt. This way, you're
centered on getting the greatest debts first that cost you the
greatest interest rates. Doing this more and more, you’ll be amazed
at how much you’ll take off your large debts.
The last and most crucial step is to jot down the amount you earn
the sum you spend. You may make use of computer cash
management programs, or make database sheets of your own.
Make a system that works for you and will help you keep track of
your monthly budgeting progression.
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Chapter 5:
Factors To Be Considered In Debt Consolidation
Synopsis
Is consolidating charge card debt a good option?
Well, the answer will more often be yes than no. Consolidating charge
card debt is frequently regarded as the opening move towards charge
card debt elimination. All the same, even before you move to take first
step toward consolidating charge card debt, you have to understand
that consolidating charge card debt (or balance transfer) is an action
that you're taking to eliminate charge card debt. Consolidating charge
card debt isn't a means of deferring the issue for later.
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Consolidating
Consolidating charge card debt is indeed a great option in more than
one sense. Not only do you get relief from the speedy increase in your
charge card debt, but likewise get additional advantages too. Offers
for consolidating charge card debt are in abundance and are really
attractive indeed.
Almost all the offers for consolidating charge card debt have an initial
low APR period during which the APR is commonly 0% (or some low
figure). As a matter of fact, this is one of the main things which make
consolidating charge card debt a really attractive option.
Besides this low APR, the offers for consolidating charge card debt
likewise include things like no interest rate on the purchases made
during first five months (or some other initial period) of balance
transfer. This is another thing that lowers the speed at which your
charge card debt extends.
So these are the two most important advantages that charge card
suppliers deploy to attract individuals into consolidating charge card
debt with them. Then there are additional advantages which include
things like additional reward points on the member’s reward program
of the charge card you're consolidating charge card debt to.
These reward points may be redeemed for other attractive
goods/rebates/rewards etc. Occasionally, the new charge card (i.e. the
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one you're consolidating charge card debt to) may be a charge card
that caters more to your present spending needs both in terms of the
charge limits and the way you spend your cash.
For instance, the new charge card could be a co-branded one offered
by an airline that you've started travelling with very frequently and
consolidating charge card debt on such a card might be much more
advantages as compared to your current charge card which was based
on your needs at the time. The charge card you're consolidating
charge card debt with may open up discount offers to you.
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Chapter 6:
Re-Financing to Consolidate Debt
Synopsis
A few homeowners opt to re-finance to consolidate their existing
debts. With this sort of option, the homeowner may consolidate
higher interest debts like charge card debts under a lower interest
home loan. The interest rates affiliated with home loans are
traditionally lower than the rates affiliated with charge cards by a
considerable amount.
Deciding whether or not to re-finance for the purpose of debt
consolidation may be a kind of tricky issue. There are a number of
complex elements which enter into the equation including the total of
existing debt, the difference in interest rates as well as the difference
in loan terms and the present financial state of the homeowner.
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Refinancing
The term debt consolidation may be fairly confusing as the term itself
is fairly deceptive. When a homeowner re-finances his home for the
purpose of debt consolidation, he is not really consolidating the debt
in the true sense of the word. By definition to consolidate means to
combine or to merge into one system. But, this isn't what really
occurs when debts are consolidated. The existing debts are really
repaid by the debt consolidation loan. Although the total sum of debt
stays constant, the individual debts are repaid by the new loan.
Before the debt consolidation the homeowner might have been
repaying a monthly debt to one or more charge card companies, a car
lender, a student loan lender or any number of additional lenders but
now the homeowner is repaying one debt to the mortgage lender who
supplied the debt consolidation loan. This fresh loan will be subject to
the applicable loan terms including rates of interest and repayment
period. Any terms affiliated with the individual loans are no longer
valid, as each of these loans has been paid back in full.
When thinking about debt consolidation it's crucial to determine
whether lower monthly payments or an overall increase in savings is
being sought. This is a crucial consideration as while debt
consolidation may lead to lower monthly payments if a lower interest
mortgage is obtained to repay higher interest debts there is not
always a total cost savings. This is because interest rate alone doesn't
determine the amount which will be paid in interest. The total of debt
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and the loan term, or length of the loan, figure prominently into the
equation too.
As an illustration, consider a debt with a comparatively short loan
term of 5 years and an interest only somewhat higher than the rate
associated with the debt consolidation loan. In that case, if the term
of the debt consolidation loan were 30 years the repayment of the
original loan would be extended over the course of 30 years at a rate
of interest which is only somewhat lower than the original rate. In
that case, it's clear the homeowner could end up paying more in the
long run. But, the monthly payments will likely be drastically
reduced. This sort of decision forces the homeowner to decide
whether a total savings or lower monthly payments is more crucial.
Homeowners who are thinking about re-financing for the purpose of
debt consolidation ought to carefully consider whether or not their
financial situation will be bettered by re-financing. This is crucial as
some homeowners might opt to re-finance as it increases their
monthly cash flow even if it doesn't result in a total cost savings.
There are a lot of mortgage calculators available on the Net which
may be used for purposes like determining whether or not monthly
cash flow will increase. Utilizing these calculators and consulting with
industry experts will help the homeowner to make an intelligent
decision.
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Chapter 7:
Student Loan Consolidation
Synopsis
Student loan consolidation has much to offer. That's what a lot of
experts often say.
To discover what consolidation has to offer, let’s
read on.
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Student Loans
Over time, the student loans you've borrowed have been specified
with assorted variable interest rates. Note that the key word here is
variable. While the loan you got might have offered, say, 3.5 percent
initially, the rate will actually go up as the rates of interest go up. So,
if you have 2 or more of these loans, there's a great chance that you
might have owed amounts at assorted rates, and these rates may rise
and fall yearly.
Considering that, the interest rates have nowhere else to go but up,
it's no doubt a safe bet that the debt you have accrued will mount
faster than it would if you think about a student loan consolidation.
By thinking about consolidation and remaining on your ten years
payment plan, it's possible that you are able to lock your interest at
today’s current loan rates and save a few bucks over the long run.
Apart from that, all of those loans that might have come from
different lending companies or banks may be a burden to deal with.
So, if you consolidate, it means that you simply deal with one
exclusive company and one payment instead of several. Other than
that, you have the amazing chance to get added bonuses like payment
and interest rate decreases in case you pay your debts on time over a
period of months. These advantages are likewise possible to come if
you have automatically withdrawn your monthly payment from a
checking or savings account.
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In the government consolidation loan programs, it's interesting to
realize that there are really no deadlines connected to it.
It is
supported by the fact that you may apply for the student loan anytime
during the grace period or even on the repayment period. However to
consolidate student loans, a few considerations must be paid
attention.
To consolidate student loans, you ought to realize that it commonly
take place during your grace period. At this time, the lower in-school
interest rate will then be applied to approximate the weighted average
fixed rate to consolidate student loans. And once the grace period has
finished on your government student loans, the higher in-repayment
rate of interest will be applied to approximate the weighted average
fixed rate. Given such process, it's then understandable that your
fixed interest rate for government student loan consolidation will be
bigger if you consolidate student loans after your grace period.
And when you're interested in consolidating student loans, you ought
to understand that even of your student loans are already in
repayment, consolidating student loans is still allowed and
advantageous. It's for the reason that when you consolidate student
loans at this time, you already fix the interest rate on your
government student loans while the rates are still low.
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Chapter 8:
Ways To Save Money
Synopsis
The word “frugality” has left a more negative connotation for most
individuals than merely being a saver, a tightwad or cheapskate.
There's a thin line difference to saving and too much frugality to the
point of being awkward and absurd. This is where the negative
connotation comes from.
But if you're guided with the correct principles and reasons in
deciding to live a frugal life, you will never go wrong.
If you've decided to live frugally, no need to be worried about insults.
Keep your head up high. And keep your focus on these tips.
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Tips
1. Dining out - Having meet ups with friends on a Friday night is
all right if you do it once in a while. However, this can be expensive
if you add them up at the end of the month.
2. Clothing - of course, if you're the kind of individual who loves
signature and designer clothes, don't expect that there will be
something left from your take home pay. Rather than being trendy,
wear clothes that may easily be matched with your other clothes.
3. Owning a Home - If you're planning to move out and find a
place to settle, don't get overwhelmed by the excitement, rather be
practical. As a start, purchase a smaller house or try other ways
like
rent-to-own,
do-it-yourself
arrangements,
and
owner
financing.
4. Purchasing Your Own automobile - Shy away from sports cars
or SUVs. Simply stick to your purpose of purchasing an automobile
which is to transport you where you need to go. Check into also
things like a new automobile warranty. Perhaps this isn't the best
time to replace your automobile with a new one.
5. Shopping for Groceries - As much as possible don't go with
items that are brand names. Search for off-brands and try looking
for items on the highest or lowest shelves for best prices. Grab the
opportunity and shop during sales or use coupons.
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6. Family Out - There are cheap ways to bond with your loved ones
and be entertained like going to libraries, local parks, picnics, visit
friends and local church.
7. Purchasing School Supplies - Stock school supplies at home and
don't purchase anything fancy.
8. Be content with what you have and try to live within what you
earn.
9. Plan your Child’s College Education - Teach them the ways to be
independent and self-supporting by encouraging them to apply for
scholarships and “on campus jobs”.
10. Be Aware of your financial limits
11. Anticipate your failures by Planning - Have always a budget
plan so you will avoid impulsive purchasing.
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Wrapping Up
More Ways To Boost Your Consolidation Skills
With a debt consolidation plan consumers are able to get rid of debts
quickly and conveniently. Although this loan does not pay off all debts
at one go, it surely takes care of them in a more systematic manner.
A person is no longer required to make innumerable calculations for
paying off monthly debts (from loans and credit cards). Each and
every month needn’t be a month of low finances and heavy interest
payments. A good consolidation plan immensely assists in managing
all financial debts responsibly and wisely.
Go for popular and authentic professional consolidation
In the market there are innumerable debt consolidation plans, each
aiming towards reducing financial pressure for the consumer. When
such professional help is used, one can easily shift the payment stress
from oneself on to the consolidation plan.
This single loan will handle all the personal loans, car loans, student
loans and credit card loans. In-return the consumer is required to pay
a single debt which is lower in interest.
There is only one payment to be calculated, only one date to be
remembered and only one payment to be made every month. This is a
gift in disguise as it gives the consumer a break from the financial
stress.
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However, it is highly important to get a debt consolidation plan which
fits otherwise a consumer may suffer monetarily. It is important to
check the success records of the consolidation plan. Online reviews of
consumers and personal experiences of family and friends are a great
help while deciding on a good consolidation plan.
Making yourself aware about credit management methods
Getting into an appropriate debt consolidation plan will benefit the
consumer in a big way but a bad consolidation plan will lead to total
disaster. It is very essential to gain good knowledge about what a debt
consolidation plan has to offer. Reading articles written by previous
consumers and financial experts will surely improve consumer’s debt
consolidation management skills.
Going for debt counseling
Many consumers like to go for a professional consultation before debt
consolidation. As a consumer you may not be so sure about the
guidelines of a good debt consolidation plan, so professional advice
helps in a major way.
There are several consultants who are known to give beneficial advice
which can improve the credit health of a consumer. Improved credit
would automatically generate larger finances helping people
consolidate their credit in a very wise manner.
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Successful debt consolidation plans are initiated by consumers who
are not obsessed with their finances. On the contrary, they are the
relaxed and knowledgeable consumers who are looking towards a
long term improvement of credit.
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